Milkpoint Survey of Top 100 Brazilian Milk Producers

• Provides an overview of the Brazilian dairy industry
• Gives a summary of statistics from the top 100 dairy producers in Brazil

MilkPoint, the dairy branch of AgriPoint Consulting, is the main dairy website in Brazil, with more than 25.000 subscribers from 43 countries. Its purpose is to be acquainted with and follow production and market trends in the world, with the objective of improving profitability in the short term and sustainability of dairy production in the long term. Since 2001, it conducts the Top 100, a survey with the largest dairy producers in Brazil. The website can be accessed at http://www.milkpoint.com.br/.

Summary

• The top 100 Brazilian milk producers for 2003 increased production by 4.6%, on average, when compared with the top 100 for 2002. The gain was lower than the increase in the previous year – 23.5% (2002 compared with 2001).
• The gain in production was higher (8.7%) if only the producers who participated in the previous issue are taken into account.
• 66% of the Top 100 – 2003 producers intend to increase production in 2004, whereas 25% intend to keep production unchanged, 4% intend to slow down production and 1% - 1 producer – intends to close down operations. 4% still don't know, didn't inform or are unsure. The % of producers that intend to increase production is higher than last year's (56%).
• The production systems were equivalent. The systems based on the use of pastures in part of the year accounted for 50% of the indications, compared to 47% of confinement. Since the criteria have changed, the assessment can not be compared to last year's.
• The average production of herds confined in free stall was 27.5 kg/day. The production of herds confined in dirt lots was 24.5 kg/day and the production of herds raised in pasture-based or mixed systems was 20 kg/cow/day.
• The Holstein breed, with 63% of the indications, is frequently the most used breed, followed by the Girolando breed, with 27%.
• Minas Gerais not only remains the leader in number of dairy farms, but also increased participation considerably: 45% of the top 100 are located in the major milk producing state. São Paulo had the most significant fall, losing 9 producers and accounting for 19 dairy farms among the top 100. A few changes took place in the other states

Initiative

The Top 100 Survey is an initiative of the MilkPoint website and was carried out for the first time in 2001, with the purpose of finding out who and where the top milk producers were in Brazil. Therefore, the survey fills an existing information gap in the dairy sector and makes it possible to keep pace with the changes of the so-called “geography of milk in Brazil”, which regards the major Brazilian milk producers.

The survey was carried out thanks to the contribution of hundreds of readers of MilkPoint, who made it possible to gather the information needed for the release of the top 100 survey.

We would like to thank the following companies: Arm & Hammer, DeLaval and Nutron Alimentos for making the survey feasible.

Lastly, we would like to thank all milk producers who participated in the survey and agreed to give data of their farms. We hope, in retribution, that the information gathered will be of great value for making decisions in their businesses.

Survey Procedure

The survey was carried out in two distinct stages:

• Preliminary survey.
• Checking and authorization for releasing

During the Preliminary Survey, the initiative was released on the MilkPoint website, so the readers could give their contribution. In this stage, about 200 suggestions were made by dairy farms that could be ranked among the top 100. The survey was based on a minimal daily production estimated at 4000 liters, the approximate production of the 100th dairy farm.

In this stage, the aim was to have an approximate production that was only going to be checked in the next stage, when the data for 2003 was consolidated.

During the Checking Stage, selected producers were contacted individually to confirm the production and the basic data (farm's name, district, milk classes, dairy industry to whom they sell milk) and ask for authorization for releasing the data.

The survey was based on the milk production (in liters) marketed in 2003. The gross production was not taken into account since, during the survey, it was noticed that many farms would not know accurately how much milk was consumed internally or discharged. To a certain extent, this fact could reduce the volume of milk produced in each productive unit. Adopting the marketed production was essential to work with more reliable data.

Participation

Owing to the fact that each milk producer had to be contacted individually and had to authorize the release of the data, some of them who should be in the top 100 list ended up not being included. Yet, the absences, estimated at 9 producers (3 of whom could not be contacted and 6 of whom opted not to give data, for different reasons), did not influence significantly on the final result. Among the major absences, there were three producers: one from Minas Gerais, one Paraná and another from Ceará, each one producing more than 12,000 liters/day (3171 gal).

It should be highlighted that more farmers participated in the Top 100 - 2003 survey than in the Top 100 - 2002 (15 absences known). In turn, more farmers participated in the Top 100 - 2002 than in its first issue, when the absences were estimated at approximately 35 producers.

Top 100 MilkPoint - 2004

Table 1. THE TOP 10 MILK PRODUCERS FOR 2003 - click here for the full 100

Ranking 2003	Ranking 2002	Owner	Annual Production (l)	Liters/day	District	State
1	1	Orostrato Olavo Silva Barbosa	20000000	54795	Tapiratiba	SP
2	2	Huguette E. F. de Noronha Guarany	13854385	37957	Inhaúma	MG
3	3	Agrindus S/A Empresa Agrícola e Pastoril	11069243	30327	Descalvado	SP
4	4	Agropecuária Palma	7665000	21000	Luziania	GO
5	6	Lair Antonio de Souza	7200000	19726	Araras	SP
6	7	Taycir Ghader	6820000	18685	Luz	MG
7	8	Antonio Carlos Pereira	6668973	18271	Carmo Rio Claro	MG
8	11	Sebastião Antônio da Silva	6482725	17761	Coromandel	MG
9	-	Família Amaral	6407500	17555	Major Isidoro	AL
10	9	Antônio Alves Capanema	5911720	16196	Pará de Minas/ S. J. da Varginha	MG

Table 1. THE TOP 10 MILK PRODUCERS FOR 2003 (cont.) - click here for the full 100

Ranking 2003	Ranking 2002	Owner	Milk sold to
1	1	Orostrato Olavo Silva Barbosa	Leite Fazenda Bela Vista (próprio) e terceiros
2	2	Huguette E. F. de Noronha Guarany	Nestlé
3	3	Agrindus S/A Empresa Agrícola e Pastoril	Leite Salute (próprio), Leite Nilza e outros
4	4	Agropecuária Palma	Leite Palma (próprio); excedente para Nestlé
5	6	Lair Antonio de Souza	Leite Xandô (próprio) e Leite Nilza
6	7	Taycir Ghader	Embaré
7	8	Antonio Carlos Pereira	Vigor e Nestlé
8	11	Sebastião Antônio da Silva	Embaré e Coronataa
9	-	Família Amaral	Ilpisa
10	9	Antônio Alves Capanema	Itambé

Production growth by farm

However, the milk production for 2003 was up 4.6% from 2002, much less than 23.5% (from 2001 to 2002). This difference can be explained in part by the fact that participation in 2001 was lower than last year's, while the difference in participation between 2002 and 2003 was much lower. In other words, many milk producers whose production was probably enough to be ranked among the top 100 - 2001, ended up being out of the rank, pushing the average down.

If only the producers who participated in the previous issue were taken into account, production would increase more: 8.7%. This figure is close to 12%, which is the increase in production from 2001 to 2002, if only the producers who participated in the list of 2001 were taken into account.

Twenty-five producers (31.2%) out of 80 who participated in both lists, slowed down production, while 55 (68.8%) increased production. The % of those who ad slowed down production this year was higher than last year's: 22.5%.

These figures can be better understood if the last year's indications are analyzed (only producers who were in 2003's list) - (Table 2):

TABLE 2. INTENTION x WHAT HAPPENED IN 2003

In 2003, producers who intended to:	What happened:
Increase production - 50	28 increased
	28 increased 1
	10 slowed down
Keep production unchanged – 25	12 increased
	7 kept unchanged
	7 slowed down
Slowed down production - 3	1 increased
	2 slowed down
Close down operations	1 increased

 1 – Production of +- 5% was used as a criterion to establish if production was kept unchanged

The minimal production to determine the inclusion of a farm in the list increased from 4,155 kg/day (9140 lb) to 4,225 kg (9314 lb), + 1.7% (22.5% from 2001 to 2002).

Fewer changes in the list

As expected, there were fewer changes in the 2003's list when compared with 2002, than from 2002 to 2001. The reasons why 20 producers out of 100 (who were in last year's list) are not in this issue are the following:

• 12 had low production
• 6 closed down operations
• 1 opted not to give data
• 1 did not contact back

Therefore, there were 20 new milk producers in the 2003's list. The number of producers who closed down operations in 2003 was three times higher than in 2002: 6 producers (5 of which are in São Paulo) compared with 2.

Except from the Amaral Family (a group of producers from Alagoas not included in the 2002's list and whose production is more than 17,000 kg/day (37,479 lb), the first “freshman” producer is ranked 48th.

The relatively small number of new producers included in the list can also be interpreted as probably lack of dynamism in the sector, regarding the major milk producers. In 2003, there were only 14 new projects in Brazil with more than 16 milk units (e.g.: double 8). It can be considered poor if 2003 was taken into account as the year of the activity upturn, with stable or rising prices up to the last quarter.

The TOP farms

Growth was recorded among the top 10 producers: from 22,851 liters/day (6038 gal) to 25,227 liters (6666 gal), a 10.4% growth.

The Bela Vista Farm, owned by Olavo S. Barbosa, ranked first in the list once again, up 27.9% from 2002, producing more than 54,000 liters/day (14,269 gal). Besides holding the first position, Bela Vista Farm had the largest absolute increase, in kg/day (graphic 1).

Among the changes in the top 10 are: Agropecuária Bianco was excluded after selling off its herd in 2003, the Amaral Family was included, as previously mentioned, and Sebastião Silva, a producer from Minas Gerais, was included in the top 10 after growing more than 6,000 kg/day (13,228 lb).

Among the producers who gained more positions in the ranking are Marcelo C. Araújo and José E. Araújo, from São Vicente de Minas, gaining 55 positions.

Graphic 1: Largest absolute increases from 2002 to 2003

  
 
Minas Gerais gains and São Paulo loses position

Table 3 records the data compiled by region and state. The South and the Southeast region still register most of the dairy farms (92%). The Northeast region registers 5% and the Center-West 3% (same as last year).

Minas Gerais is the top leader State and gained more leadership. Now, 45 out of 100 producers are located in Minas Gerais, compared to 36% in previous year. São Paulo had a significant fall: 28 producers in 2002, compared with 19 in 2003.

A few changes were recorded in the other States. Paraná increased to 19% and tied with São Paulo, Rio Grande do Sul maintained 5 farms; Goiás still registers 3 farms among the top 100, losing to Alagoas, 4 farms.

Table 3. FARMS BY STATE/REGION

Region	State	Number of farms
Southeast		67
	MG	45
	SP	19
	RJ	2
	ES	1
Center-West		3
	GO	3
Northeast		5
	AL	4
	BA	1
South		25
	PR	19
	RS	5
	SC	1
Total		100

Producers intend to increase production in 2004

As occurred last year, we surveyed producers with respect to their outlook for 2004 regarding the activity.

Although the crisis faced in the beginning of the year may lead to a cautious behavior, most producers (66%) surprisingly expect to increase production in 2004, which is a higher result when compared to last year's.

On the other hand, 25% intend to keep production unchanged, either because their facilities and performance have reached optimal levels, or because they feel there is no appealing reason to increase investment in the sector, the latter being the prevailing reason.

Four producers intent to slow down production, whereas only one intents to close down operations in 2004. Four producers would or could not answer.

This data is worthy of further analysis, because it reveals an obvious intention of the 100 top producers to increase production.

It is very likely that these producers, who have a corporate vision of business, are trying to optimize the use of production resources by an increase in the output, as a response to the market.

It is also worth considering that distortion might have occurred to a certain extent, given the questions were asked via telephone and this may have been distressful for some of the interviewed.

Nevertheless, even if the said distortion actually occurred, it does not change the fact that, most top producers wish to increase or at least maintain production in 2004 at the same levels of 2003.

The production increase in the last few years helps to confirm this possibility.

Chart 2. WHAT IS THE OUTLOOK FOR 2004?

In the State of Minas Gerais, 65% of the producers reported their intention to increase (against last year's 61%). In the State of São Paulo, there was a marked change: 63% said they will increase production in 2004, against last year's 32%. In the State of Paraná, 63% talked about increasing production in 2004, against last year's 67%. The São Paulo producers who remain in the top list continue to have better expectations than last year. In the State of Rio Grande do Sul, 4 out of 5 producers have shown interest in increasing production in 2004, when compared to 2003. Last year, all 5 signaled toward an increase.

Balancing between full confinement and grazing
In this year's issue, we again examined the production systems. However, a change has occurred which prevents comparison with last year's data.

There was no separation between partial confinement and grazing, because it was difficult for several producers to separate the two systems. Nevertheless, when it comes to grazing, concentrate supplementation is given to the majority of herds during the forage growing season, not to mention that, during the dry season, most producers keep the animals in feedlots.

Accordingly, categories are divided as follows:

CONFINEMENT: in this case, lactating cows feed exclusively from feed bunks. Some producers mentioned the use of free stall, which was also considered in the answers.

PARTIAL CONFINEMENT/GRAZING: involves farms in which a significant part of the lactating cows, during the forage growth season, uses forage as a source of roughage. This category also includes farms in which all cows graze during some period of the day.

Table 4 contains data including daily average per lactating cow, only as a reference (kg).

And for those 50% who use pastures during the wet season or all year round, it is important to point out that the type of pasture may vary greatly. Surely, pastures used by producers in the States of Rio Grande do Sul and Paraná, where this system was frequently mentioned, are very different from the pastures found in the central region of Brazil.

In the Southern states, temperate pastures contribute for a high milk production average per cow, the average production of 20 kg/cow/day (44 lb) was reported on a pasture-based dairy farm.

Among the 50 grazing farms, 13 are located in Paraná and Rio Grande do Sul. This high average also suggests the use of a significant amount of supplementation.

Table 4. Production systems mentioned

Production system	% of farms	Daily average cow/lactation (kg)
Full confinement in free stall	32	27,5
Full confinement in dirt lots	15	24,5
Grazing during the wet season¹	50	20,0
Did not inform	3

¹ - Almost all producers offer supplementation during the summer and use confinement in dirt lots, with some pasture during the winter.

According to the data obtained, full confinement is still a frequent practice among the top 100 milk producers, totaling 47%, against last year's 44%. In those cases, free stall facilities predominate, with high milking average (3.2 kg/cow/day, (7 lb)).

Holstein breed leads

Among the breeds (table 5) used by the top 100 milk producers, the Holstein leads the ranking, with 63 indications (57 in the last year's survey), followed by Girolando breed and Gyr + Holstein crossbred, with 27 indications (24 in the last year's survey). Other breeds had few indications, totaling 10 farms.

Table 5. MOST USED BREED

Most Frequently Used Breeds	% of farms
Holstein	63
Girolando Breed or with various degrees of Holstein blood	27
Grazing during the wet season¹	50
Other	10

DPA leads

As in 2002 (table 6), private dairy plants were in evidence, with 12 indications. The relatively high number of verticalized production farms may indicate a search for better economic results. Three farms which have their own label and were in last year's list, have closed down operations this year, all of which are located in the State of Sao Paulo: Calumby, Itambi and Bianco (the dairy plant is still in operation).

The greatest difference in comparison to 2002, however, is the fact that DPA (a joint venture between Nestlé and Fonterra) has surpassed the remaining dairy companies, including own labels, collecting milk from 18 out of the top 100 farms. This reflects the corporate trend that, for the past few years, has significantly changed its supplier's production unit.

The Pool de Leite ABC, which comprises producers from Arapoti, Batavo and Castrolanda cooperatives, marketing milk for several companies, had also 13 indications, followed by CCL, from São Paulo, which had 10 indications and Itambé, with 8, while Kremon/Mococa and Parmalat had 7 indications.

It is worth noticing that the number of dairy plants that collect milk from the top 100 producers has increased when compared to 2002, totaling 43 companies against last year's 33.

Table 6. WHERE THE MILK IS MARKETED

Dairy Plant	Number
DPA	18
Private dairy plant	12
Pool de Leite ABC	13
CCL	10
Itambé	8
Kremon 1	7
Parmalat/Batávia	7
Vigor	4
Elegê	2
Embaré	2
Da Matta	2
Letícia	2
Cotochés	2
Sul Minas	2
Leite Nilza	2
Other	28

1 - with 6 producers from Mococa, bought by Kremon

Most of them refer to MilkPoint

Finally, we have investigated whether the top 100 producers visit the MilkPoint website, which was launched in 2000 and has over 22,000 readers.

The great majority – 74% - frequently visits the site, which indicated that MilkPoint, 4 years after its launch on the Internet, is already an important source of information for most of the top milk producers.

Final observation

The Top 100 – 2004 has allowed us to have an overview of the 100 top milk producers in Brazil, providing us with information on trends and generating data which was not previously available. It is imperative, however, that the agents envolved in the milk chain reflect on the data surveyed.

• Although several producers seemed discouraged, very likely as a result of the Parmalat crisis, the number of producers who expect to intensify production in 2004 increased. In view of the critical situation, this is an interesting result because it means that most top 100 producers have a long-term view regarding the activity.
• This year's figures indicate that São Paulo has definitely been losing space. The only significant change in the geographic distribution of producers was the growth in Minas Gerais and the marked decrease in Sao Paulo. At this rate, there will likely be more producers from the State of Paraná among the top 100 than from the State of São Paulo next year.
• Nevertheless, many producers have slowed down production from 2002 to 2003, totaling 31.2%. It is a considerable amount, given prices have been relatively stable during the year, which normally translated into an increase in production. For our next survey, it will be interesting to try to identify what has caused the production to decrease between 2002 and 2003.
• Another aspect to be considered is that there were only a few changes in this year's list when compared to 2002's. Only a few new projects have been implemented and there were not many changes in position on the list. There are two ways to construe this information. The first hypothesis suggests that the top 100 producers is a stable group whose operations have reached a certain degree of maturity. According to the second, the environment is not favorable for new business in the sector, especially regarding major projects, which demand high investments and depend on more consistent market signals to be actually implemented.

We wish to thank those who made this survey possible, whether by indicating farms, making suggestions or allowing their farms to participate in the survey. We hope to have taken an X-ray of the top 100 milk producers in Brazil and to have contributed to a better understanding of the dynamics that guide the development of this group.

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